美国
证券交易委员会
华盛顿特区 20549
表格
（修订案第1号）
(标记一个)
| 根据1934年证券交易法第13或15(d)条款的季度报告。 |
截至季度结束的期间
或
| 根据1934年证券交易法第13或15(d)条款的过渡报告 |
委员会档案编号
（依凭章程所载的完整登记名称） |
| ||
(成立州) |
| （联邦税号） |
(总部办公地址) (邮递区号)
(
(注册人电话号码，包括区号)
根据法案第12(b)条规定注册的证券：
每种类别的名称 |
| 交易标的（s） |
| 每个注册交易所的名称 |
|
| 股市 |
请回答以下问题：（1）公司是否在过去12个月内依据 1934年交易所法第13条或第15(d)条呈报了所有要求呈报的报告（或者在更短的期限内公司是否需要呈报此类报告），（2）公司是否在过去90天内需要呈报此类报告。
请用勾记号表示公司是否在过去12个月内（或申报对象所需提交的较短期间内）已递交所有应递交的交互式资料档案，根据S-t法规405条款(本章规232.405节)的要求。
请打勾选取适用的类别，即公司是否为大型加速提名者、加速提名者、非加速提名者、较小的报告公司或新兴成长公司。请参见交易所法第120亿2条中对「大型加速提名者」、「加速提名者」、「较小的报告公司」和「新兴成长公司」的定义：
大型加速归档人 | ☐ | 加速归档人 | ☐ |
☒ | 小型报告公司 | ||
|
| 新兴成长型企业 |
如果是新兴成长型企业，在符合任何依据证券交易法第13(a)条所提供的任何新的或修改的财务会计准则的遵循的延伸过渡期方面，是否选择不使用核准记号进行指示。☐
请用勾选表示是否申报人为外壳公司（定义见《交易所法》第120亿2条）。 是
截至2024年11月19日，共有
说明注释：
登记人的10-Q表格于2024年11月19日提交给证券交易委员会，未包含内嵌XBRL标记。本次修订号1的目的仅为在登记人的10-Q表格中增加内嵌XBRL标记，此为依据S-t规则405的要求，针对截至2024年9月30日的季度期间所作。
对登记人提交的10-Q表格没有进行任何更改。此修正案第1号并不反映原始提交日期之后发生的任何后续事件，亦不以任何方式修改或更新原始提交中的披露。
| 2 |
目录
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| 3 |
| 目录 |
第I部分 - 财务资讯
项目1. 财务报表
endra life sciences公司
简明合并资产负债表
|
| 九月三十日， |
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| 十二月三十一日， |
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资产 |
| 2024 |
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| 2023 |
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流动资产 |
| (未经审计) |
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现金 |
| $ |
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| $ |
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预付费用 |
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所有流动资产总额 |
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非流动资产 |
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存货净额 |
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固定资产，扣除累计折旧和摊销 |
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租赁资产 |
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预付费用，长期 |
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其他资产 |
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总资产 |
| $ |
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550,714 |
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流动负债 |
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应付帐款及应计负债 |
| $ |
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| $ |
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租赁负债，流动部分 |
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贷款 |
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全部流动负债 |
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长期负债 |
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租赁负债 |
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认股权负债 |
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总长期债务 |
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总负债 |
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股东权益 |
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A系列可转换优先股，$ |
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可转换优先B股，$ |
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可转换优先C股，$ |
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0.01 |
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额外资本赠与金 |
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应付股票 |
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累积亏损 |
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股东权益总计 |
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负债总额和股东权益总额 |
| $ |
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| $ |
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附注是这些未经审计的简明综合财务报表的一个组成部分。
| 4 |
| 目录 |
endra life sciences公司
损益综合表简明合并报表
(未经审计)
|
| 截至三个月 |
|
| 截至三个月 |
|
| 九个月结束 |
|
| 九个月结束 |
| ||||
|
| 九月三十日， |
|
| 九月三十日， |
|
| 九月三十日， |
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| 九月三十日， |
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| 2024 |
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| 2023 |
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| 2024 |
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| 2023 |
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营运费用 |
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研发 |
| $ |
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| $ |
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| $ |
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销售和市场推广 |
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一般及行政费用 |
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营业费用总额 |
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营运亏损 |
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其他费用 |
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其他收入（费用） |
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认股权费用 |
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认股权责任公平价值的变动 |
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认股权证行使结算的盈亏 |
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其他费用总计 |
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营业损失（税前） |
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所得税准备 |
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净亏损 |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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基本和稀释每股净损失 |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
| $ | ( | ) |
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普通股权加权平均值-基本和稀释 |
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附注是这些未经审计的简明综合财务报表的一个组成部分。
| 5 |
| 目录 |
endra life sciences公司
股东权益简明合并报表
(未经审计)
截至2023年9月30日止九个月 |
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| A系可换股 |
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| 乙系列可转换 |
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| 追加 |
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| 总计 |
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| 优先股 |
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| 优先股 |
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| 普通股 |
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| 已付入 |
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| 股票 |
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| 累积的 |
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| 股东的 |
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| 股份 |
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| 金额 |
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| 股份 |
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| 金额 |
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| 股份 |
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| 金额 |
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| 资本 |
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| 支付 |
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| 赤字 |
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| 权益 |
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截至2022年12月31日的余额 |
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| $ |
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| - |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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以现金发行普通股，除去筹资成本后的净额 |
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发行现金认股权证，扣除资金成本后净额 |
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| - |
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| - |
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| - |
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已授予股权的公允价值 |
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| - |
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| - |
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| - |
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股份支付优先股息 |
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| - |
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| - |
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| - |
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净亏损 |
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| - |
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| - |
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| - |
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截至2023年9月30日的余额 |
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| $ |
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| - |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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截至2024年9月30日的九个月份 |
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| A系可换股 |
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| 乙系列可转换 |
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| 追加 |
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| 总计 |
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| 优先股 |
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| 优先股 |
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| 普通股 |
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| 已付入 |
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| 股票 | 累积的 | 股东的 |
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| 股份 |
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| 金额 |
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| 股份 |
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| 金额 |
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| 股份 |
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| 金额 |
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| 资本 |
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| 支付 |
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| 赤字 |
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| 权益 |
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截至2023年12月31日的余额 |
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| $ |
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| - |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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优先股转换为普通股 |
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| - |
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以现金发行普通股 |
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为权证行使而发行的普通股 |
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为无现金权证行使而发行的普通股 |
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已获得普通股的公平价值（与被终止员工的期权取消相抵消） |
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| - |
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已授予股权的公允价值 |
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股份支付优先股息 |
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| - |
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净亏损 |
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| - |
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| - |
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| - |
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截至2024年9月30日的余额 |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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| 6 |
| 目录 |
2023年9月30日结束的三个月 |
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| A系可换股 |
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| 乙系列可转换 |
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| 追加 |
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| 总计 |
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| 优先股 |
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| 优先股 |
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| 普通股 |
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| Paid in |
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| 股票 |
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| 累积的 |
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| 股东的 |
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| 股份 |
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| 金额 |
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| 股份 |
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| 金额 |
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| 股份 |
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| 金额 |
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| 资本 |
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| 支付 |
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| 赤字 |
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| 权益 |
| ||||||||||
截至2023年6月30日的余额 |
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| $ |
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| - |
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| $ |
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| $ |
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| $ |
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| $ |
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| $ | ( | ) |
| $ |
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以现金发行普通股，除去筹资成本后的净额 |
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| - |
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| $ |
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| - |
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| $ |
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| $ |
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| $ |
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已授予股权的公允价值 |
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| - |
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| - |
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股份支付优先股息 |
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| - |
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| - |
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| - |
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净亏损 |
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| - |
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截至2023年9月30日的余额 |
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为权证行使而发行的普通股 |
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授予股票期权的公平价值（扣除已终止员工的期权） |
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股份支付优先股息 |
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净亏损 |
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截至2024年9月30日的余额 |
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| 7 |
| 目录 |
endra life sciences公司
简明合并现金流量量表
(未经审计)
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经营活动现金流量 |
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净亏损 |
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调整为使净亏损转化为经营活动所使用现金： |
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折旧及摊销 |
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固定资产注销 |
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存货储备 |
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租赁资产摊提 |
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认股权费用 |
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认股权责任公平价值的变动 |
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认股权证行使结算的盈亏 |
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营运资产和负债的变化： |
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预付费用减少 |
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存货增加 |
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应付款项和应计负债下降 |
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租赁负债减少 |
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经营活动所用的净现金 |
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投资活动产生的现金流量 |
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固定资产的购买 |
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固定资产出售所得 |
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来自融资活动的现金流量 |
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普通股发行所得款项 |
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来自发行warrants的收益 |
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现金无息认股权证发行所得 |
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还款贷款 |
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筹资活动提供的净现金 |
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现金流量净增加（减少） |
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期初现金余额 |
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期末现金余额 |
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现金项目的补充披露 |
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非现金项目的补充披露 |
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股票现金股利应付 |
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租赁资产 |
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租赁负债 |
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无现金换股权 |
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附注是这些未经审计的简明综合财务报表的一个组成部分。
| 8 |
| 目录 |
endra life sciences公司
附注至简明综合财务报表
截至2024年和2023年9月底的九个月
(未经审计)
备注1 - 业务的性质
endra life sciences公司（“endra”或 “公司”）已研发并继续发展科技，进行非侵入式组织特征分析，可在病人护理的现场，扩大病人对多种重大医疗状况安全诊断和治疗的接触范围，在昂贵的X光电脑断层扫描（CT）、核磁共振影像（MRI）或其他科技不可用或不切实际的情况下。
ENDRA成立于2007年7月18日，是一家特拉华州的公司。
附注2 - 重大会计政策摘要
估计的使用
根据美国一般公认会计原则编制基本报表，要求管理层进行估算和假设，这些估算和假设会影响所报告的资产和负债的数额，以及在基本报表日期披露的或有负债，和报告期间的费用报告数额。实际结果可能与这些估算有所不同。
管理层对影响某些账户的估计进行了评估，包括推迟所得税资产、应计费用、股权工具的公允价值以及其他承诺或可能负债的储备金。对估计数字进行的任何调整均在确定该等调整的期间内认可。
合并原则
公司的合并基本报表包括截至报告期结束日期和截至该报告期的公司的所有帐目及其合并子公司和/或实体。所有板块之间的余额和交易均已被消除。
报告基础
附表所列的未经审核的总体财务基本报表及相关附注是根据证券交易委员会（“SEC”）的规则和法规编制的。 因此，根据该等规则和法规，已省略了通常包括在按照通行会计原则编制的财务报表中的某些资讯和注脚披露。 在管理层的意见中，为了公平呈现，被认为必要的所有调整（包括正常的周期应计数）已经包含在内。 截至2024年9月30日止九个月的营运结果并不能必然反映出截至2024年12月31日结束的年度可能期待的结果。 2024年9月30日的资产负债表是根据该日期的已审核财务报表获得的。 更多信息，请参阅公司年度财务报表中包括2023年12月31日结束的十二个月的财务报表和注脚，该公司在2024年3月28日向SEC提交的年度报告第10-K表中包括的。
现金及约当现金
该公司将所有手头现金以及存放在银行中的资金，包括账户透支部位中的账目、定期存单以及购买时剩余期限一年或一年以下的其他高度流动性投资，视为现金。现金等价物包括投资于机构货币型基金的投资，该基金投资于美国国库券、票据和债券，以及/或回购协议，并以此等债务担保。帐面价值接近公平价值。该公司将现金存入银行存款账户，有时可能超出联邦保险限制。该公司未在该等账户中遭受任何损失，并定期评估金融机构的信用质素，已确定信用风险可忽略不计。该公司在多家银行保留现金存款，以减轻任何特定银行失败所带来的风险。
存货
公司的存货按成本或预估净实现价值中的较低者记载，成本主要根据加权平均成本基础和先进先出法确定。公司定期确定是否应对存货减值或陈旧采取储备。公司于2024年9月30日评估了其存货，并确定了某些挑战，包括潜在的损坏和初始销售的时间长，需要设立存货缩水储备。因此，公司认列了一项存货储备，金额为
| 9 |
| 目录 |
固定资产的资本化
公司对与物业和设备相关的支出进行资本化，受最低标准规则规定，对于具有超过一年以上使用寿命的资产：(1) 已购买的资产；(2) 被替换、改善或使用寿命已延长的现有资产；或(3) 所有土地，无论成本如何。新资产的收购、增加、更换和改善（不包括土地）的成本低于最低规则的，以及维护和维修成本，包括任何计划的主要维护活动，均按照发生支出的方式列支。
租赁
会计准则更新（"ASU"）第2016-02号要求承租人在资产负债表上对所有期限超过12个月的租赁记录使用权资产及相应的租赁负债。对于在财务报表中所呈现的最早期间开始时存在的或在之后签订的资本租赁和营运租赁，承租人需采用修改后的追溯过渡方法。截至2024年9月30日及2023年12月31日，公司记录的使用权资产为$
收入确认
ASU No. 2014-09，《来自顾客合约的营业收入》（“ASC主题606”）提供了一套统一的营业收入确认指导方针，适用于所有行业并要求额外的披露。更新的指导方针引入了一个五步骤模型，以实现其核心原则：实体确认营业收入以反映向顾客转移商品或服务的价值，金额反映实体预期因这些商品或服务而应得的酬金。
根据ASC主题606，为了确认营业收入，公司需要识别一份已批准的合同，承诺履行各自的义务，识别交易中每一方有关待转移货物的权利，识别转移货物的付款条款，核实合同具有商业实质，以及核实收款几乎所有对价均是可能的。采用ASC主题606对公司的运营或现金流没有影响。
研发成本
公司遵循FASB会计标准编纂（"ASC"）子主题730-10，"研究与开发"。研究与开发费用在发生时计入营运报表。于截至2024年9月30日及2023年9月30日的三个月内，公司承担了$
每股普通股净收益（亏损）
公司根据ASC 亚题 260-10“每股盈利”计算每股盈利。基本每股盈(损)利由归属于普通股股东的净利润(分子)除以在报告期间内普通股股份的加权平均数(分母)计算。每股摊薄损益则通过增加分母，以用通过可转换为普通股的证券(使用“库存股份”方法)的加权平均数增加的额外股份的加权平均数计算，除非其对每股净损益有稀释作用。这是有潜在稀释份额，包括截至2024年9月30日和2023年12月31日分别尚未行使的普通股期权和warrants。
|
| 九月30日， 2024 |
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| 十二月三十一日， 2023 |
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购买普通股的期权 |
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购买普通股的认股权证 |
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可转换A系列可换股溢数股份 |
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排除的潜在等值股份 |
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| 10 |
| 目录 |
Fair Value Measurements
关于金融工具公允价值的披露要求披露公允价值资讯，无论是否在资产负债表中确认，只要能够合理估计该价值。
根据ASC主题820，"公允价值测量和披露"，本公司定期以公允价值测量某些金融工具。ASC主题820定义了公允价值，确立了根据美国通用会计原则测量公允价值的框架，并扩展了关于公允价值测量的披露。
公允价值被定义为，在测量日期，以有秩序的交易方式在市场参与者之间进行资产出售时可获得的价格，或者转移负债时应支付的金额。ASC主题820确立了一个三层次的公允价值层次结构，优先考量在衡量公允价值时使用的输入。此层次给予最高优先顺位于活跃市场上未经调整的相同资产或负债的报价价格（1级别测量），并给予最低优先顺位于无法观察的输入（3级别测量）。这些层次包括：
· | 第一级，定义为可观察的输入，例如活跃市场中相同工具的报价。 |
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· | 第二级，定义为在活跃市场中除了报价外的输入，这些输入可以直接或间接观察，例如在活跃市场中相似工具的报价或在不活跃市场中相同或相似工具的报价;以及 |
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· | 3级，被定义为不可观察的输入，其中几乎没有市场数据存在，因此要求实体开发自己的假设，例如源自估值方法的估值，其中一个或多个重要输入或重要价值驱动因素是不可观察的。 |
如果金融资产使用定价模式、折扣现金流方法或类似技术确定其公平价值，而至少一个重要模型假设或输入无法观察，则视为第 3 级。
公司的财务资产和负债，包括现金、应收帐款、预付费用、应付帐款、应计费用和其他流动负债的携带金额，由于这些工具的短期性，与其公允价值接近。 由于目前的利率期货和条款与这些债务的市场利率相同，因此应付票据和可转换票据的公允价值与其公允价值相当。
股份报酬
公司的2016年综合激励计划（“综合计划”）允许向其员工、顾问以及非雇员的董事会成员授予期权和其他以股份为基础的奖励。每年的1月1日，根据综合计划可发行的股份池自动增加，增加的数量等于以下两者中的较小者：(i) 必要的股份数量，使得综合计划下可发行的股份总数等于增加日完全摊薄流通股总数的25%（假设将所有流通中的优先股和其他可转换证券转换，以及行使所有流通中的期权和warrants以购买股份）和 (ii) 如果董事会采取行动设定较低的金额，则由董事会确定的金额。
公司依照FASB Codification的《股份基础报酬》主题条款记录股份基础报酬，指南要求使用需要输入高度主观假设的期权定价模型，包括期权的预期寿命和基础股票价格波动性。每个期权授予的公平价值是根据授予当日使用Black-Scholes期权定价模型估计，结果费用使用直线分摊法在执行期内分摊。
期权费用再认列期间是根据预期在期间内才能授予的股份奖励的价值，并考虑估计的取消。若适用，公司对非员工发放的股票期权和认股权的估计公平价值会在基本报表中予以费用化。这些期权的取得方式与上述股票激励计划下授予的员工期权相同。
| 11 |
| 目录 |
经营概念
公司的基本报表是根据美国一般会计准则（“U.S. GAAP”）编制的，适用于持续经营，预期在业务正常运作过程中实现资产和清偿负债。公司具有有限的商业经验，从成立至2024年9月30日累计净损失为$
最近会计宣告
公司考虑了由FASB、包括其新兴问题工作组、美国注册会计师协会和SEC发布的最近的会计准则，据管理层意见，这些准则对公司目前或未来的综合基本报表不会造成重大影响。
备注 3 - 存货
截至2024年9月30日及2023年12月31日，库存包括原材料、将用于TAEUS系统组装的子组件以及成品。截止2024年9月30日，该公司没有待售的TAEUS系统订单。
截至2024年9月30日，公司记录了存货备抵。
截至2024年9月30日和2023年12月31日，该公司的库存价值为$
备注 4 - 固定资产
截至2024年9月30日和2023年12月31日，固定资产包括以下：
|
| 九月30日， 2024 |
|
| 十二月三十一日， 2023 |
| ||
财产、租赁和资本化的软体 |
| $ |
|
| $ |
| ||
TAEUS的开发和测试 |
|
|
|
|
|
| ||
累计折旧 |
|
| ( | ) |
|
| ( | ) |
固定资产，扣除累计折旧和摊销 |
| $ |
|
| $ |
| ||
2024年和2023年截至9月30日三个月的折旧费分别为美元。
截至2024年9月30日及2023年的九个月折旧费用为$
注解 5 - 应付帐款及应计负债
截至2024年9月30日和2023年12月31日，流动负债包括以下项目：
|
| 九月三十日 2024 |
|
| 十二月三十一日 2023 |
| ||
应付帐款 |
| $ |
|
| $ |
| ||
累计薪酬 |
|
|
|
|
|
| ||
累积奖金 |
|
|
|
|
|
| ||
累计员工福利 |
|
|
|
|
|
| ||
保险费融资 |
|
|
|
|
|
| ||
总计 |
| $ |
|
| $ |
| ||
| 12 |
| 目录 |
附注6 - 银行贷款
多伦多道明银行贷款
于2020年4月27日，公司根据加拿大紧急业务账户与TD银行签署承诺贷款，本金总额为CAD
备注 7 - 资本股
股本
截至2024年9月30日，公司的授权资本包括
截至2024年9月30日，已发行股票，
截至2024年9月30日止的九个月内，本公司共发行了
已登记发行（下文详述）：
-
-
其他发行：
-
-
-
-
系列B权证行使：
-
截至2023年9月30日的九个月内，本公司共发行了
注册发售
在2024年6月4日，公司与Craig-Hallum Capital Group LLC（以下称「配售代理」）签订了一份配售代理协议（以下称「配售协议」），根据该协议，配售代理将以最佳努力的方式，协助发行及销售（以下称「发行」）3,490股普通股和预先资助的认购权证，购买总数为
公司在扣除由公司支付的发售费用后，从发售中获得的净收益为$
| 13 |
| 目录 |
该发行是根据该公司于2024年6月4日由SEC宣布生效的表格S-1（文件编号333-278842）的登记声明进行的。
系列认股权是在2024年8月20日生效的逆向股票分割中首次行使的。每个A系列认股权将在最初行使日期后五年到期。每个B系列认股权将在最初行使日期后两年半到期。
根据B系列认股权的可替代无现金行使选项，B系列认股权持有人有权利收到之股份总数等于(x)在假设以$为行使价值进行B系列认股权的无现金行使时可能发行的普通股份总数和(y)3.0的乘积。
此外，这些序列认股权包括一项条款，在公司普通股进行逆向拆分至价格等于（i）当时的行使价格及（ii）在公司进行逆向股票拆分当日前五个交易日起始及当日起始的五个交易日内的最低成交量加权平均价格（VWAP）（该较低价格为“底价”），前提是该底价不得低于0.0434美元（受逆向与正向拆分、归并及类似交易的调整影响），并对序列认股权所包括的股份数进行比例调整。公司于2024年8月及2024年11月进行的逆向拆分导致序列A认股权及序列b认股权的基础股份总数分别为178,255。
根据某些例外情况，A系列warrants提供在公司发行普通股或普通股等价物时，根据其价格低于A系列warrants的执行价格，对执行价格和基于A系列warrants的股份数量进行调整，前提是该调整后的价格不得低于$
持有人如其（连附属公司）持有的公司普通股数量在行使后将超过公司已发行的股份数的4.99%，则无权行使任何Series A认股权或Series B认股权。
根据配售协议，除了上述描述的配售代理权证外，
公司已同意，根据某些例外情况，不会在发行协议中定义的变量利率交易期间内进行任何普通股或可转换为普通股的证券的发行，该期间始于发行协议之日，持续至发行结束后的180天。
市场定向股本发行计划
公司于2021年6月21日与Ascendiant（「2021年6月ATM协议」）签订了大宗发行销售协议，卖出普通股股份，总毛收益高达$
Reverse Stock Split
在2024年8月16日，公司向特拉华州的国务卿提交了一份修订证书（"修订证书"），该修订证书于2024年8月20日东部时间凌晨12:01（"生效时间"）生效，实施公司普通股的1比50反向拆股（"2024年8月反向拆股"）。所有每股金额（包括行使价格）和合并基本报表及其附注中的股份数量已追溯重述，以反映2024年8月反向拆股及2024年11月反向拆股（如下文第13条所述）。在2024年8月反向拆股中，没有发行碎股，也不会发行碎股。
2024年8月的反向股票拆分导致每股转换或行使价格及可转换或行使的优先股、期权和warrants所发行的普通股数量的按比例调整，以及根据综合计划可发行的普通股数量。
| 14 |
| 目录 |
备注 8 - 普通股期权及受限股票
普通股期权
根据综合计划，股票期权被授予公司的员工、顾问以及董事会的非员工成员，通常以授予日期公司普通股票的市场价格作为行使价格。2024年9月30日截至的九个月内，公司授予的这些股票期权的总公平价值被确定为 $
|
| 数量 期权 |
|
| 加权 平均值 行使 价格 |
|
| 加权 平均值 剩余 合约上的 期限（年） |
| |||
2023年12月31日的未偿余额 |
|
|
|
| $ |
|
|
|
| |||
已授予 |
|
|
|
|
|
|
|
|
| |||
已行使 |
|
| - |
|
|
|
|
|
| - |
| |
放弃 |
|
|
|
|
|
|
|
| - |
| ||
取消或到期 |
|
| ( | ) |
|
|
|
|
| - |
| |
2024年9月30日尚未偿还的余额 |
|
|
|
| $ |
|
|
|
| |||
可在2024年9月30日行使 |
|
|
|
| $ |
|
|
|
| |||
受限普通股
于2023年11月30日，公司发行了受限普通股（“受限股票”）给PatentVest, Inc.（“PatentVest”），根据一项受限股票协议和咨询服务协议，每项协议均与PatentVest签订，以交换为公司的专利组合提供的某些服务。受限股票的公允价值确定为$
笔记9 - 普通股认股权证
如“注册发行”（注释7）所述，公司发行了可预先资助的warrants，可购买多达合计的
Additionally, the Series B Warrants contain an alternative cashless exercise option whereby the holder of a Series B Warrant has the right to receive an aggregate number of shares equal to the product of (x) the aggregate number of shares of common stock that would be issuable upon a cashless exercise of the Series B Warrant using $
In connection with the Offering, the Company also issued placement agent warrants (“Placement Agent Warrants” and, together with the pre-funded warrants and the Series Warrants, the “Warrants”) to purchase up to
Warrant Exercises
On May 2, 2023, the Company conducted a registered offering in which the Company issued
| 15 |
| Table of Contents |
Between June 4, 2024 and June 7, 2024,
Between August 19, 2024 and September 3, 2024, the Company issued a total of
The following table summarizes all warrant activity of the Company for the nine months ended September 30, 2024:
|
| Number of Warrants |
|
| Weighted Average Exercise Price |
|
| Weighted Average Contractual Term (Years) |
| |||
Balance outstanding at December 31, 2023 |
|
|
|
| $ |
|
|
|
| |||
Issued |
|
|
|
|
|
|
|
|
| |||
Exercised |
|
| ( | ) |
|
|
|
|
|
| ||
Forfeited |
|
| - |
|
|
| - |
|
|
| - |
|
Expired |
|
| - |
|
|
|
|
|
| - |
| |
Balance outstanding at September 30, 2024 |
|
|
|
| $ |
|
|
|
| |||
Exercisable at September 30, 2024 |
|
|
|
| $ |
|
|
|
| |||
Common Stock Warrants
On August 20, 2024 (the “Issuance Date”), the Company issued
Series A Warrants
Each Series A Warrant entitles the holder to purchase one share of the Company’s common stock at $
In addition, if there is a share price adjustment upon a split, reverse-split, share dividend, or share combination recapitalization, and the lowest VWAP during the preceding five trading days is less than the exercise price in effect (the “Event Market Price”), the then exercise price shall be reduced to the Event Market Price and the number of warrant issuable shall be increased such that the aggregate exercise price of the Series A Warrant on the Issuance Date then outstanding shall remain unchanged.
Series B Warrants
Each Series B Warrant entitles the holder to purchase one share of the Company’s common stock at $
| 16 |
| Table of Contents |
In addition, if there is a share price adjustment upon a split, reverse-split, share dividend, or share combination recapitalization, and the lowest VWAP during the preceding five trading days is less than the exercise price in effect (the “Event Market Price”), the then exercise price shall be reduced to the Event Market Price and the number of warrant issuable shall be increased such that the aggregate exercise price of the Series B Warrant on the Issuance Date then outstanding shall remain unchanged.
Alternative Cashless Exercise for Series B Warrants
The holders of the Series B Warrants may exercise their warrants at the alternative cashless exercise price of $1.75 per share. Also, upon cashless exercise, the holder receives three underlying common shares for each warrant exercised.
Redemption Right
Recurring Fair Value Measurements
The Company’s warrant liability for the Series A and Series B Warrants is based on the Black-Scholes option pricing model utilizing management judgement and pricing inputs from observable and unobservable markets. Significant deviations from these estimates and inputs could result in a material change in fair value. The fair value of the warrant liability is classified within Level 2 of the fair value hierarchy because the Company uses observable inputs like market prices for its common stock and risk-free interest rate, but requires estimations for factors like the Company’s own volatility, which is not directly quoted in active markets.
Measurement
The Company established the initial fair value for the warrant liability on August 20, 2024, the date the warrants were issued. Upon exercise, the instrument is marked to its fair value upon exercise, and the shares delivered are recorded at fair value in the Company’s statement of stockholders’ equity. The warrant liability was valued based on the following inputs for the Series A and Series B Warrants, respectively:
Input |
| August 20, 2024 (Initial Measurement) |
| September 30, 2024 | ||
Exercise price |
|
| $ |
|
| $ |
Stock price |
| $ |
|
| $ | |
Volatility |
|
|
|
| ||
Discount rate |
|
|
|
| ||
Expected dividend |
|
|
|
| ||
Expected life (years) |
|
|
|
| ||
Note 10 - Related Party Transactions
On October 17, 2023, the Company entered into a consulting agreement with one of its directors, Alex Tokman, pursuant to which Mr. Tokman provided commercialization services. Under the terms of the agreement, Mr. Tokman was compensated at a rate of $
On November 30, 2023, the Company entered into a Restricted Stock Agreement and Consulting Services Agreement, each with PatentVest, in exchange for certain services related to the Company’s patent portfolio. PatentVest is a wholly-owned subsidiary of MDB Capital Holdings, LLC (“MDB”). Anthony DiGiandomenico, a member of the Company’s board of directors, is the Chief of Transactions and a director of MDB. Lou Basenese, a member of our board of directors, is President and Chief Market Strategist at Public Ventures LLC, a wholly-owned subsidiary of MDB.
There were no related party transactions during the quarter ended September 30, 2024.
Note 11 - Commitments and Contingencies
Office Lease
Effective January 1, 2015, the Company entered into an office lease agreement with Green Court, LLC, a Michigan limited liability company, for approximately
| 17 |
| Table of Contents |
On March 15, 2021, the Company entered into an amendment to the lease, adding approximately
The Company records the lease asset and lease liability at the present value of lease payments over the lease term. The lease typically does not provide an implicit rate; therefore, the Company uses its estimated incremental borrowing rate at the time of lease commencement to discount the present value of lease payments. The Company’s discount rate for operating leases at September 30, 2024 was
As of September 30, 2024, the maturities of operating lease liabilities are as follows:
|
| Operating Lease |
| |
2024 |
|
|
| |
2025 and beyond |
|
|
| |
Total |
| $ |
| |
Less: amount representing interest |
|
| ( | ) |
Present value of future minimum lease payments |
|
|
| |
Less: current obligations under leases |
|
| ( | ) |
Long-term lease obligations |
| $ |
| |
For the nine months ended September 30, 2024 and 2023, the Company incurred rent expenses of $
Employment and Consulting Agreements
Alexander Tokman - Effective August 13, 2024, the Board appointed Alexander Tokman as the Company’s acting Chief Executive Officer and Chairman of the Board of Directors. In connection with his appointment, Mr. Tokman and the Company entered into an employment agreement, dated August 13, 2024 (the “Employment Agreement”). Mr. Tokman’s employment with the Company is “at will” and may be terminated by him or the Company at any time and for any reason. Pursuant to the Employment Agreement, Mr. Tokman will receive an annual base salary of $
If Mr. Tokman’s employment is terminated by the Company without cause (as defined in the Omnibus Plan), if Mr. Tokman resigns for good reason (as defined in the Employment Agreement), or if Mr. Tokman’s employment ends following the hiring no later than February 13, 2026 of a replacement chief executive officer whom Mr. Tokman assists in recruiting, Mr. Tokman will be entitled to receive, subject to his execution of a standard release agreement, 12 months’ continuation of his current base salary and a lump sum payment equal to 12 months of continued healthcare coverage (or 24 months’ continuation of his current base salary and a lump sum payment equal to 24 months of continued healthcare coverage if such termination occurs within one year following a change in control). Additionally, under the Employment Agreement, Mr. Tokman is eligible to receive benefits that are substantially similar to those of the Company’s other senior executive officers.
The foregoing description of the Employment Agreement does not purport to be complete and is subject to, and qualified in its entirety by the full text of the Employment Agreement, which is filed as an exhibit with this Report.
Michael Thornton - The Company has an employment agreement with Michael Thornton, the Company’s Chief Technology Officer, dated May 12, 2017, as amended December 27, 2019. The employment agreement provides for an annual base salary that is subject to adjustment at the board of directors’ discretion. Effective January 1, 2022, the Compensation Committee increased Mr. Thornton’s annual salary to $
If Mr. Thornton’s employment is terminated by the Company without cause or Mr. Thornton terminates his employment for good reason,
Under his employment agreement, Mr. Thornton is eligible to receive benefits that are substantially similar to those of the Company’s other senior executive officers.
| 18 |
| Table of Contents |
Richard Jacroux - On August 7, 2024, the Company’s Board of Directors appointed Richard Jacroux as Chief Financial Officer. Mr. Jacroux works in a part-time capacity for the Company through Impact Solve, LLC (dba Impact Solutions) an accounting and chief financial officer service firm. Mr. Jacroux receives a base monthly fee of $
Litigation
From time to time the Company may become a party to litigation in the normal course of business. As of September 30, 2024, there were no legal matters that management believes would have a material effect on the Company’s financial position or results of operations.
Note 12– Subsequent Events
Reverse Stock Split
At a Special Meeting of Stockholders of the Company held on October 28, 2024 (the “Special Meeting”), the stockholders of the Company approved amendments to the Company’s Fourth Amended and Restated Certificate of Incorporation effecting reverse stock splits of the Company’s common stock, and authorized the Company’s Board of Directors, in its discretion, to effect a reverse stock split of Common Stock , whereby each issued and outstanding share of Common Stock would be reclassified and converted into a fraction of a share between ¼ and 1/35 (the “Ratios” and each, a “Ratio”), inclusive (the “November 2024 Reverse Stock Split”). Following the Special Meeting, the Board approved a Ratio of 1/35.
The November 2024 Reverse Stock Split resulted in a proportionate adjustment to the per share conversion or exercise price and the number of shares of common stock issuable upon the conversion or exercise of outstanding preferred stock, stock options and warrants, as well as the number of shares of common stock eligible for issuance under the Omnibus Plan. All per share amounts (including exercise prices) and numbers of shares in the consolidated financial statements and related notes have been retroactively restated to reflect the November 2024 Reverse Stock Split. No fractional shares were, or shall be, issued in connection with the November 2024 Reverse Stock Split.
Issuance of Shares
The company issued
| 19 |
| Table of Contents |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
As used in this Quarterly Report on Form 10-Q (this “Form 10-Q”), unless the context otherwise requires, the terms “we,” “us,” “our,” “ENDRA” and the “Company” refer to ENDRA Life Sciences Inc., a Delaware corporation, and its direct and indirect subsidiaries. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our historical financial statements and related notes thereto in this Form 10-Q. This Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the “safe harbor” created by those sections. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as “believe,” “expect,” “may,” “will,” “should,” “could,” “would,” “seek,” “intend,” “plan,” “estimate,” “anticipate” or other comparable terms. All statements other than statements of historical facts included in this Form 10-Q, including those regarding our strategies, prospects, financial condition, operations, costs, plans and objectives, are forward-looking statements. Examples of forward-looking statements include, among others, statements we make regarding expectations for revenues, cash flows and financial performance, the anticipated results of our development efforts and the timing for receipt of required regulatory approvals and product launches. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in, or implied by, the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the following: our limited commercial experience, limited cash and history of losses; our ability to obtain adequate financing to fund our business operations in the future; our ability to achieve profitability; our ability to develop a commercially feasible application based on our Thermo-Acoustic Enhanced Ultrasound (“TAEUS”) technology; market acceptance of our technology; uncertainties associated with any future pandemic, including possible effects on our operations; results of our human studies, which may be negative or inconclusive; our ability to find and maintain development partners; our reliance on collaborations and strategic alliances and licensing arrangements; the amount and nature of competition in our industry; our ability to protect our intellectual property; potential changes in the healthcare industry or third-party reimbursement practices; delays and changes in regulatory requirements, policy and guidelines including potential delays in submitting required regulatory applications for Food and Drug Administration (“FDA”) approval; our ability to obtain and maintain CE mark certification and secure required FDA and other governmental approvals for our TAEUS applications; our ability to regain compliance with the listing standards of the Nasdaq Capital Market and maintain the listing of our common stock on such exchange; our ability to comply with regulation by various federal, state, local and foreign governmental agencies and to maintain necessary regulatory clearances or approvals; and the other risks and uncertainties described in the Risk Factors section of our Annual Report on Form 10-K for the period ended December 31, 2023, as filed with the SEC on March 28, 2024, and in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of this Form 10-Q. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.
Available Information
From time to time, we use press releases, X (formerly) Twitter (@endralifesci) and LinkedIn (www.linkedin.com/company/endra-inc) to distribute material information. Our press releases and financial and other material information are routinely posted to and accessible on the Investors section of our website, www.endrainc.com. Accordingly, investors should monitor these channels, in addition to our SEC filings and public conference calls and webcasts. In addition, investors may automatically receive e-mail alerts and other information about the Company by enrolling their e-mail addresses by visiting the “Email Alerts” section of our website at investors.endrainc.com. Information that is contained in and can be accessed through our website, X posts and LinkedIn are not incorporated into, and do not form a part of, this Quarterly Report or any other report or document we file with the SEC.
Overview
We are leveraging experience with pre-clinical enhanced ultrasound devices to develop technology for increasing the capabilities of clinical diagnostic ultrasound and other types of capital equipment, to broaden patient access to the safe diagnosis and treatment of a number of significant medical conditions in circumstances where expensive X-ray CT and MRI technology, or other diagnostic technologies such as surgical biopsy, are unavailable or impractical. Building on our expertise in thermoacoustics, we have developed a next-generation technology platform-Thermo Acoustic Enhanced Ultrasound, or TAEUS-which is intended to enhance the capability of clinical ultrasound technology and support the diagnosis and treatment of a number of significant medical conditions that currently require the use of expensive CT or MRI imaging or where imaging is not practical using existing technology.
The first-generation TAEUS application is a standalone ultrasound accessory designed to cost-effectively quantify fat in the liver and stage progression of nonalcoholic fatty liver disease (“NAFLD”), which can otherwise only be achieved today with impractical surgical biopsies or MRI scans. Subsequent TAEUS offerings are expected to be implemented via a second-generation hardware platform that can run multiple clinical software applications that we will offer TAEUS users for a licensing fee-adding ongoing customer value to the TAEUS platform and a growing software revenue stream for our Company.
Each of our TAEUS platform applications will require regulatory approvals before we are able to sell or license the application. Based on certain factors, such as the installed base of ultrasound systems, availability of other imaging technologies, such as CT and MRI, economic strength and applicable regulatory requirements, we intend to seek initial approval of our applications for sale in the European Union and the United States, followed by China.
In March 2020, we received CE mark approval for our TAEUS FLIP (“Fatty Liver Imaging Probe”) System, enabling its marketing and sales in the European Union and other CE mark geographies, including the 27 EU member states.
In June 2020, we submitted a 510(k) Application to the FDA for our TAEUS Fatty Liver Imaging Probe (“FLIP”) System. In February 2022, we announced that we would pursue FDA reclassification and clearance of our TAEUS FLIP System through the FDA’s “de novo” process. We subsequently voluntarily withdrew our 510(k) Application submitted a de novo request for the TAEUS system to the FDA in the third quarter of 2023. In the fourth quarter of 2023, the FDA sent us an Additional Information (“AI”) request related to our de novo application. After we received the AI request, we have had several interactions with the FDA and have provided additional information. In order to fully respond to the FDA’s questions, we will need to compile additional clinical data, provide additional device test data, and respond to cybersecurity related questions in a new de novo submission. We had an in-person pre-submission meeting with the FDA on May 16, 2024. We currently anticipate completing the necessary clinical studies by the fourth quarter of 2024 or first quarter of 2025 and submitting the new de novo request to the FDA in the first half of 2025.
| 20 |
| Table of Contents |
Financial Operations Overview
Revenue
No revenue has been generated by our TAEUS technology, which we have not commercially sold as of September 30, 2024.
Research and Development Expenses
Our research and development expenses primarily include wages, fees and equipment for the development of our TAEUS technology platform and the proposed applications. Additionally, we incur certain costs associated with the protection of our products and inventions through a combination of patents, licenses, applications and disclosures. These costs and expenses include:
· | employee-related expenses, such as salaries, bonuses and benefits, consultant-related expenses such as consultant fees and bonuses, stock-based compensation, overhead related expenses and travel-related expenses for our research and development personnel; |
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|
· | expenses incurred under agreements with contract research organizations (“CROs”), contract manufacturing organizations (“CMOs”) as well as consultants that support the implementation of our clinical and non-clinical studies; |
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· | manufacturing and packaging costs in connection with conducting clinical trials; |
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· | formulation, research and development expenses related to our TAEUS technology; and |
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· | costs for sponsored research. |
We plan to incur research and development expenses for the foreseeable future as we expect to continue the development of TAEUS and pursue FDA approval of the NAFLD TAEUS system. At this time, due to the inherently unpredictable nature of clinical development and regulatory approvals, we are unable to estimate with certainty the costs we will incur and the timelines we will require in our continued development efforts.
Sales and Marketing Expenses
Sales and marketing expenses consist primarily of headcount and consulting costs, and marketing and tradeshow expenses. Currently, our marketing efforts are through our website and attendance of key industry meetings and conferences. During the second quarter, we restructured our European sales operations to better align with the Company’s near-term sales prospects. We expect to add to our sales representation and support headcount for operations in the EU as demand and resources permit in the future, and plan to begin staffing our sales efforts in the United States once we have obtained FDA approval for the sale of the NAFLD TAEUS device in that region.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and related expenses for our management and personnel, and professional fees, such as for accounting, consulting and legal services. We anticipate continued costs associated with being a public company, including expenses related to services associated with maintaining compliance with The Nasdaq Capital Market and SEC requirements, directors and officers insurance, increased legal and accounting costs and investor relations costs.
Critical Accounting Policies and Estimates
Warrant Liability
The Company accounts for the liability classified warrants in accordance with the guidance contained in ASC 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging. Such guidance provides criteria for instruments do not meet the criteria for equity treatment thereunder. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations.
Use of Estimates
The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
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Management makes estimates that affect certain accounts including deferred income tax assets, accrued expenses, fair value of equity instruments and reserves for any other commitments or contingencies. Any adjustments applied to estimates are recognized in the period in which such adjustments are determined.
Share-based Compensation
Our Omnibus Plan permits the grant of stock options and other stock awards to our employees, consultants and non-employee members of our board of directors. Each January 1 the pool of shares available for issuance under the Omnibus Plan automatically increases by an amount equal to the lesser of (i) the number of shares necessary such that the aggregate number of shares available under the Omnibus Plan equals 25% of the number of fully-diluted outstanding shares on the increase date (assuming the conversion of all outstanding shares of preferred stock and other outstanding convertible securities and exercise of all outstanding options and warrants to purchase shares) and (ii) if the board of directors takes action to set a lower amount, the amount determined by the board. On January 1, 2024, the pool of shares issuable under the Omnibus Plan automatically increased by 982 shares from 756 shares to 1,737 shares. As of September 30, 2024, there were 1,458 shares of common stock remaining available for issuance under the Omnibus Plan.
We record share-based compensation in accordance with the provisions of the Share-based Compensation Topic of the FASB Codification. The guidance requires the use of option-pricing models that require the input of highly subjective assumptions, including the option’s expected life and the price volatility of the underlying stock. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option valuation model which uses certain assumptions related to risk-free interest rates, expected volatility, expected life of the common stock options, and future dividends, and the resulting charge is expensed using the straight-line attribution method over the vesting period.
Recent Accounting Pronouncements
See Note 2 of the accompanying financial statements for a discussion of recently issued accounting standards.
Results of Operations
Three months ended September 30, 2024 and 2023
Revenue
We had no revenue during the three months ended September 30, 2024 and 2023.
Cost of Goods Sold
We had no cost of goods sold during the three months ended September 30, 2024 and 2023.
Research and Development
Research and development expenses were $794,444 for the three months ended September 30, 2024, as compared to $1,632,849 for the three months ended September 30, 2023, a decrease of $838,405 or 51%. The costs include primarily wages, fees, equipment and third-party costs for the development of our TAEUS product line. Research and development expenses decreased from the prior year as we complete development of our initial TAEUS product and began focusing our spending on clinical trials and commercialization of the product that has been developed.
Sales and Marketing
Sales and marketing expenses were $83,157 for the three months ended September 30, 2024, as compared to $243,332 for the three months ended September 30, 2023, a decrease of $160,175, or 66%. The costs include primarily headcount and pre-selling activities for our TAEUS product line. Sales and marketing expenses decreased largely due to our restructuring in the second quarter. Currently, our marketing efforts are through our website and attendance of key industry meetings.
General and Administrative
Our general and administrative expenses for the three months ended September 30, 2024 were $631,413, compared to $1,252,881 for the three months ended September 30, 2023, a decrease of $621,468, or 49%. Our wage and related expenses for the three months ended September 30, 2024 were $(142,536), compared to $565,639 for the three months ended September 30, 2023. Wage and related expenses in the three months ended September 30, 2024 included $(144,445) of cancellation of equity awards in connection with the departure of an executive officer, compared to $67,932 of stock compensation expense related to the issuance and vesting of options for the three months ended September 30, 2023. Our professional fees, which include legal, audit, and investor relations, for the three months ended September 30, 2024 were $598,255, compared to $447,515 for the three months ended September 30, 2023.
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Other Income
Other income (expense) was $(845,076) for the three months ended September 30, 2024 was primarily due to accounting for warrants. Other income was $28,226 for the three months ended September 30, 2023, a decrease of $873,302 or 3,094%.
Net Loss
As a result of the foregoing, for the three months ended September 30, 2024, we recorded a net loss of $2,354,090, compared to a net loss of $3,100,836 for the three months ended September 30, 2023.
Nine months ended September 30, 2024 and 2023
Revenue
We had no revenue during the nine months ended September 30, 2024 and 2023.
Cost of Goods Sold
We had no cost of goods sold during the nine months ended September 30, 2024 and 2023.
Research and Development
Research and development expenses were $2,552,336 for the nine months ended September 30, 2024, as compared to $4,424,345 for the nine months ended September 30, 2023, a decrease of $1,872,009 or 42%. The costs include primarily wages, fees, equipment and third-party costs for the development of our TAEUS product line. Research and development expenses decreased from the prior year as we completed development of our initial TAEUS product and began focusing our spending on commercialization of the product that has been developed.
Sales and Marketing
Sales and marketing expenses were $484,769 for the nine months ended September 30, 2024, as compared to $672,721 for the nine months ended September 30, 2023, a decrease of $187,952, or 28%. The costs include primarily headcount and pre-selling activities for our TAEUS product line. Sales and marketing expenses decreased largely due to the decrease in consulting fees. Currently, our marketing efforts are through our website and attendance of key industry meetings.
General and Administrative
Our general and administrative expenses for the nine months ended September 30, 2024 were $3,483,303 compared to $3,965,889 for the nine months ended September 30, 2023, a decrease of $482,586, or 12%. Our wage and related expenses for the nine months ended September 30, 2024 were $1,079,942, compared to $1,735,526 for the nine months ended September 30, 2023. Wage and related expenses in the nine months ended September 30, 2024 included $93,545 of stock compensation expense related to the issuance and vesting of options, compared to $252,948 of stock compensation expense related to the issuance and vesting of options, for the nine months ended September 30, 2023. Our professional fees, which include legal, audit, and investor relations, for the nine months ended September 30, 2024 were $1,820,454, compared to $1,471,850 for the nine months ended September 30, 2023.
Other Income
Other income (expense) was $(838,535) for the nine months ended September 30, 2024 was primarily due to accounting for warrants. Other income was $462,241 for the nine months ended September 30, 2023 and resulted mostly from the completion of the Employer Retention Tax Credit for employee retention in 2021 and 2022 of $413,844. Other income (expense) decreased $1,300,776 or 281% for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023.
Net Loss
As a result of the foregoing, for the nine months ended September 30, 2024, we recorded a net loss of $7,358,943, compared to a net loss of $8,600,714 for the nine months ended September 30, 2023.
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Near-Term Liquidity and Capital Resources
We are experiencing financial and operating challenges. As of September 30, 2024, we had an accumulated deficit of $99,289,095 and had $4,745,187 in cash. To date we have funded our operations through private and public sales of our securities and will need to raise additional funds in order to execute on our business plan, fully commercialize our TAEUS technology, and generate revenues.
We need additional capital to allow us to continue to execute our commercialization plans. We are considering potential financing options that may be available to us, such as sales of our common stock, including through our at-the-market sales program. Except for the at-the-market sales program, we have no commitments to obtain any additional funds, and there can be no assurance funds will be available in sufficient amounts or on acceptable terms. In addition, the Company agreed, subject to certain exceptions, not to effect any issuance of common stock or securities convertible into common stock involving a Variable Rate Transaction, as defined in the Placement Agreement and which includes sales of common stock under the at-the-market sales program, for a period commencing on the date of the Placement Agreement until 180 days following the closing of our June 2024 public offering. If we are unable to obtain sufficient additional financing in a timely fashion and on terms acceptable to us, our financial condition and results of operations may be materially adversely affected and we may not be able to continue operations or execute our stated commercialization plan.
The consolidated financial statements included in this Form 10-Q have been prepared assuming we will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. As reflected in the accompanying consolidated financial statements, during the nine months ended September 30, 2024, we incurred net losses of $7,358,943 and used cash in operations of $5,884,842. In light of our cash balance as of September 30, 2024, we will need to raise additional capital in order to fund operations through the next twelve months, and prior to any ability to fund operations from revenue generated from the sale of our products. The financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.
Operating Activities
During the nine months ended September 30, 2024, we used $5,884,842 of cash in operating activities primarily as a result of our net loss of $7,358,943, offset by share-based compensation of $467,240, amortization of right of use assets of $124,320, inventory reserve of $4,687, depreciation expense of $35,489, fixed assets write-off of $8,808, warrant expense of $7,323,685, change in fair value of warrant liability of $(3,341,829), gain on settlement of warrant exercises of $(3,071,252), and net in operating assets and liabilities of $77,047.
During the nine months ended September 30, 2023, we used $7,374,197 of cash in operating activities primarily as a result of our net loss of $8,600,714, offset by share-based compensation of $745,873, depreciation expense of $101,839, amortization of right of use assets of $112,365, and net changes in operating assets and liabilities of $266,440.
Investing Activities
During the nine months ended September 30, 2024, we used $16,000 in investing activities related to purchases of fixed assets, and received $3,204 in proceeds from sale of fixed assets.
During the nine months ended September 30, 2023, we used $27,000 in investing activities related to purchases of fixed assets.
Financing Activities
During the nine months ended September 30, 2024, our financing activities provided $1,148,470 in proceeds from issuances of common stock,$5,368,363 in proceeds from issuance of warrants, and $1,320,568 in proceeds from the issuance of cashless warrants. We also used $28,484 to repay a loan from TD Bank under the Canadian Emergency Business Account.
During the nine months ended September 30, 2023, our financing activities provided $5,846,635 in proceeds from issuances of common stock and warrants.
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Long-Term Liquidity
We have not completed the commercialization of any of our TAEUS technology platform applications. We expect to continue to incur significant expenses for the foreseeable future. We anticipate that our expenses will increase substantially as we:
| · | advance the engineering design and development of our TAEUS technology; |
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| · | acquire parts and build finished goods inventory of the TAEUS FLIP system; |
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| · | complete regulatory filings required for marketing approval of our NAFLD TAEUS application in the United States, including clinical studies to advance our de novo application with the FDA; |
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| · | seek to hire a small internal marketing team to engage and support channel partners and clinical customers for our NAFLD TAEUS application; |
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| · | expand marketing of our NAFLD TAEUS application; |
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| · | advance development of our other TAEUS applications; and |
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| · | add operational, financial and management information systems and personnel, including personnel to support our product development, planned commercialization efforts and our operation as a public company. |
It is possible that we will not achieve the progress that we expect because the actual costs and timing of completing the development and regulatory approvals for a new medical device are difficult to predict and are subject to substantial risks and delays. We have no committed external sources of funds except for the February 2024 ATM Agreement, the use of which may be limited due to registration statement rules relating to public float. We do not expect that our existing cash will be sufficient for us to complete the commercialization of our NAFLD TAEUS application or to complete the development of any other TAEUS application and we will need to raise substantial additional capital for those purposes. As a result, we will need to finance our future cash needs through public or private equity offerings, debt financings, corporate collaboration and licensing arrangements or other financing alternatives. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties, and actual results could vary as a result of a number of factors, including the factors discussed in the Risk Factors section of this Annual Report on Form 10-K. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect.
Until we can generate a sufficient amount of revenue from our TAEUS platform applications, if ever, we expect to finance future cash needs through public or private equity offerings, debt financings or corporate collaborations and licensing arrangements. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If adequate funds are not available, we may be required to delay, reduce the scope of or eliminate one or more of our research or development programs or our commercialization efforts or perhaps even cease the operation of our business. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional dilution, and debt financing, if available, may involve restrictive covenants. To the extent that we raise additional funds through collaborations and licensing arrangements, it may be necessary to relinquish some rights to our technologies or applications or grant licenses on terms that may not be favorable to us. We may seek to access the public or private capital markets whenever conditions are favorable, even if we do not have an immediate need for additional capital at that time.
Off-Balance Sheet Transactions
At September 30, 2024, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
As a smaller reporting company, we are not required to provide the information required by this Item 3.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Form 10-Q, management performed, with the participation of our principal executive officer and principal financial officer, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”). Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosures. Based on the evaluation, our principal executive officer and principal financial officer concluded that, as of September 30, 2024, our disclosure controls and procedures were not effective.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. We identified the following material weakness as of September 30, 2024: insufficient personnel resources within the accounting function to segregate the duties over financial transaction processing and reporting.
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To remediate the material weakness, management intends to implement the following measures during 2024, as the Company’s resources and financial means allow:
· | Add additional accounting personnel or outside consultants, such as a new controller, to properly segregate duties and to effect timely, accurate preparation of the financial statements; and |
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· | Continue the development of adequate written accounting policies and procedures. |
The additional hiring is contingent upon our efforts to obtain additional funding and the results of our operations.
Changes in Internal Control over Financial Reporting
There were no changes to our internal control over financial reporting or in other factors that could affect these controls during the three months ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently a party to any pending legal proceedings that we believe will have a material adverse effect on our business or financial condition. We may, however, be subject to various claims and legal actions arising in the ordinary course of business from time to time.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in this section and under “Risk Factors” in our Annual Report on Form 10-K for the period ended December 31, 2023, as filed with the Securities and Exchange Commission on March 28, 2024. These factors could materially adversely affect our business, financial condition, liquidity, results of operations and capital position, and could cause our actual results to differ materially from our historical results or the results contemplated by any forward-looking statements contained in this report.
Item 2. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None of the Company’s directors or officers adopted, modified, or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the Company’s fiscal quarter ended September 30, 2024.
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Item 6. Exhibits
Exhibit Number |
| Description |
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| Employment Agreement, dated August 13, 2024, by and between the Company and Alexander Tokman | |
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101.INS# |
| XBRL Instance Document |
101.SCH# |
| XBRL Taxonomy Schema |
101.CAL# |
| XBRL Taxonomy Extension Calculation Linkbase |
101.DEF# |
| XBRL Taxonomy Extension Definition Linkbase |
101.LAB# |
| XBRL Taxonomy Extension Label Linkbase |
101.PRE# |
| XBRL Taxonomy Extension Presentation Linkbase |
* Indicates management compensatory plan, contract or arrangement.
† Previously filed.
# Filed herewith.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| ENDRA LIFE SCIENCES INC. |
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Date: November 21, 2024 | By: | /s/ Alexander Tokman |
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| Alexander Tokman |
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| Chief Executive Officer and Chairman (Principal Executive Officer) |
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| ENDRA LIFE SCIENCES INC. |
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Date: November 21, 2024 | By: | /s/ Richard Jacroux |
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| Richard Jacroux |
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| Chief Financial Officer (Principal Financial and Accounting Officer) |
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